Madam Speaker, I want to speak to Motions Nos. 13 and 14.
Motion No. 13 has been proposed by the NDP and talks about eliminating the freeze on the yearly basic exemption. I cannot support that and I will go on to tell the House why a little later.
While I am on my feet, I also want to speak on our Motion No. 14 which would freeze the yearly basic exemption for 10 years only. I would like to frame this as best I can so that the House will know what we are proposing.
The elimination of freezing altogether as proposed by the NDP would impose an additional 1.4% in premiums. Obviously when we are changing the principal amount of money that we are dealing with and the numbers of people who are paying, it has a huge impact on the fund. We cannot operate in a vacuum when we are talking about the realities of finances. It would be fine if we could, but unfortunately we cannot. We need to make sure that the fund is stabilized. The stabilization of that fund is paramount.
Madam Speaker, earlier today you were very gracious in allowing me a few more seconds than what I should have had in the debate when I was talking about this bill. I talked about the government postponing the inevitable. That is what has happened in regard to the Canada pension plan. The government knew full well a number of years ago and certainly when it took power in 1993 that something had to be done. It could only postpone the inevitable for so long. At some point reality comes home and we have to deal with it.
If it was a normal business transaction in an insurance company in the private sector, it would have had to declare bankruptcy. It would be insolvent. However in government, and this is the only place it can happen, the government has the power to take measures to resurrect itself almost from the dead. Basically the fund at this point is dead. The Reform member mentioned that there is about two years of premiums in the fund. In other words in two years the fund will be broke.
What we are really talking about is pay in and pay out. It is on a day to day basis that the fund is sustaining itself now. The reality of having to deal with it is there.
Picking up from where I left off earlier in the day, the chance to have dealt with this reality presented itself in 1993 but postponing it is only postponing the inevitable. Now with compound interest and the demographics changing and moving around as they are and more people retiring and the pressures that are being placed on that fund, it has forced the government to increase the rates. I would call it an astronomical increase in rates.
Getting back to the reality of it, we have to deal with the cards that we have. None of us in this House or in the country want to see the fund go broke. There is an unfunded liability of $600 billion staring the government in the eye.
The motion that is proposed by the NDP just will not work. The one proposed by the Liberals talks about an indefinite freeze on the basic exemption, and we are talking about a 10 year freeze on the exemption. The differences in these three divergent points of view reminds me of what Aristotle said 2000 years ago when he said that virtue was in the middle. It is in the middle, between the two extremes. That is what our amendment does. It is grappling with reality but it is not going to one extreme or the other. We are looking at a 10 year exemption.
What could happen in the meantime if the plan's earnings are invested wisely, and much more wisely than they have been in the past and are left untampered with, in a 10 year time period we could be looking at a completely different picture. The reality at that time would be that maybe our plan of a 10 year exemption would work, but in the meantime we have to deal with the cards that are on the table. I do not think any of us wants to duck that bullet because if we do, there is going to be a lot of hurt out there in Canadian society.
I think every member of Parliament is dealing with Canada pension plan problems galore back home. A number of disabled people are applying for Canada pension, and rightfully so, and are being turned down. They are just not getting it. One of the PC party members from Nova Scotia spoke yesterday of some of these situations back in his riding. That was during the statement period yesterday, right around 2.15, shortly before question period.
I have the same type of cases back home. People who have had hip replacements and cannot work. People who have a chronic disease or a crippling disability and cannot work, some of them much younger than I am. People apply only to find out that their applications are turned down, whereas just a few short years ago those same people would have been successful in their application for Canada pension plan benefits.
What we have now is the government accepting the reality that the fund is almost broken, but in the meantime there are a lot of innocent people who are casualties because of the inability to deal with this fund in the last number of years. In other words the fund is money in and money out. The government is taking a very hard look at who qualifies for these benefits. I think that is wrong. It is absolutely wrong because we are brought up to believe that if we pay into the fund, it is going to be there.
Now we find out that mismanagement over a number of years has left a lot of Canadians out in the cold. The worst thing that we could do at this point is to allow that mismanagement to continue and to not deal with the reality of having to readjust the premiums paid by you and me to sustain that fund.
Laying blame is not going to solve the problem. It would be easy for me to stand up here and condemn the government for having to do what it is doing, which is fine. And I do not agree with the huge increase in premiums either. Nobody could.
Our position has always been and it continues to be to this day, that if we are going to tackle the question of the CPP, let us also look at the employment insurance fund. Canadians are paying too much into that fund. It is just the opposite of the CPP. We are paying too much into that fund. Today as we sit, there is about a $12 billion surplus in that fund.
What we are saying very simply is that the surplus in that fund should be applied to reduce the premiums in the Canada pension plan or at least to reduce the EI premiums that all Canadians pay so that at the end of the day it is a wash and will not be an extra tax burden on Canadians and on businesses. An increase in the CPP premium is really a hidden tax and we cannot stand any more of those hidden taxes on our businesses and professionals.